Seeks suspension of action

By Yinka Kolawole & Naomi Uzor

The organised private sector (OPS) in Nigeria has called for the suspension of the proposed increase in electricity tariff warning that the increase will spell doom for businesses in the country, especially small and medium enterprises (SMEs), and asked the action be put off for now.

Recall that the Nigerian Electricity Regulatory Commission (NERC) recently approved tariff increase for electricity distribution companies (DISCOs) effective April 1, 2020 based on  Multi-Year Tariff Order (MYTO)  methodology. This has however been suspended due to the COIVD-19 pandemic.

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In a statement made available to Vanguard, yesterday, OPS comprising of Manufacturers Association of Nigeria (MAN), Nigerian Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), National Association of Small and Medium Enterprises (NASME), Nigeria Employers Consultative Council (NASME),National Association of Small Scale Industries (NASSI)    noted that the nation’s economy is currently experiencing fragile growth, adding that any upward review will be counterproductive on consumption and productivity.

It stated: “Any form of increase in electricity in the face of inadequate electricity supply, high electricity tariff and exorbitant cost of self-generated electricity up to the tune of N119 billion (excluding billions of naira spent on settling monthly electricity bills) is not business friendly as it will further spike the cost of doing business with consequential upward spiral effects on unemployment rate.”

According to the statement, the expectations of OPS are: “A  component  assumption  of  the    MYTO  methodology  is  that  electricity  generation,  transmission  and distribution  will  improve  in  the  process,  leading  to  improved  supply  of  electricity  to  customers.

“For  that reason,  various  projections  for  generation  capacities  for  different  years  were  made.    For  instance,  5,500MW was  projected  for  2012;  7,500MW  for  2013;  9,061MW  for  2014;  10,071MW  for  2015  and  10,571MW  for 2016.  Also,  energy  to  be  sent  out  to  grid  was  projected  at  30,715  GW for  2012;  41,884GM  for  2013;  50,601 GW for 2014; 56,242 GW for 2015; and 59,034 GW for 2016.

“The  pertinent  questions  are  therefore;  Wouldn’t  they  have  been  accomplished?    Wouldn’t  it  be better  to  think more  on  how  to  improve  generation  capacity  hence  transmission  and  distribution  rather  than  squeezing  the mere 4000MW to meet all revenue needs of key sharing stakeholders?”
Against this background,  OPS recommended as follows:  “The proposed increase in electricity is not business friendly, and will have a catastrophic impact on the real sector; spell doom for the small and medium companies; and further inflict misery on the citizenry. Therefore, the proposed tariff increase should be suspended in the best interest of the Nigerian economy.

“Even if electricity tariff cannot be reduced, it should not be increased. Any increase in tariff will reinforce the already high cost of doing business for the Private Sector and further depress productivity in the manufacturing sector.”


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